Software

Commercial software continues to lead

While open source software is making its presence felt, Small Businesses are largely opting for commercial software—be it Windows or commercial databases, writes Faiz Askari

Being scattered in nature, small businesses (SBs) always put more pressure on vendors. IMRB quotes in its survey that on an average in 2005-06, SBs spent Rs 22 lakh on IT. Out of this, 13 percent was on software and 27 percent on systems.

The survey also predicted that the SB segment will continue to spend on software and systems as key focus in the coming financial year. Software spending is expected to have a nominal growth and will reach upto 14 percent of the total IT expenditure in 2006-07.

The survey indicates that majority of the CIOs/CEOs of SBs in India feel that IT is seen as a tool to rake in more profits, mostly through optimisation of resources and increased efficiency of the system.

Vendors’ views on the market

"With almost 1.9 million SMBs operational in India and the growth rate being 20 to 30 percent, the segment holds huge potential" - Rajeev Mittal Group Director, SMS&P Microsoft India

“With almost 1.9 million small and medium businesses (SMBs) operational in India, and the growth rate being 20 to 30 percent, the segment holds huge potential,” says Rajeev Mittal, Group Director, Small and Medium Solutions and Partners (SMS&P), Microsoft India.

"SMB is an emerging and key focus area for the Software Group at IBM. A large percentage of new opportunities are from this sector" - R Dhamodaran Country Manager, Software Group, IBM India

Putting across IBM’s views on the market, Country Manager, Software Group, IBM India, R Dhamodaran says, “The small segment is the emerging and key focus area for the Software Group at IBM. A large percentage of new opportunities are from this sector.”

He explains, “A solutions-based approach is the key. IBM has a data management solution which suits the entire spectrum of businesses including small organisations. Management of content, data archiving, business intelligence (specifically cleansing and warehousing) are the key solutions that these customers will be looking for in 2006. In addition, we have built a strong ecosystem comprising independent software vendors (ISVs) and resellers, who have their solutions around DB2 to address smaller organisations.”

Seema Ambastha, Senior Solutions Manager, Technologies, Oracle India says, “SMBs make up more than 80 percent of Oracle’s 25,000 plus customer base in Asia Pacific. They have unique needs in data management. The segment is price-conscious and has to find the best solutions within that parameter. But it is a large space and hence organisations cannot afford to ignore it.  Oracle works closely with partners, ISVs and Value Added Distributors (VADs) to provide the solutions and technology that fits into this space. The best way to look at the segment lies in providing end-to-end solutions that include hardware, software applications and support bundled into one.” 

The open source factor

In the survey, the facts on Linux acceptability among SBs were encouraging. The survey stated that 30 percent of SBs are now using Linux-based software applications. The main drivers being; low cost of acquisition—51 percent and reliability—53 percent.

Dhamodaran expresses, “Open source is catching up in spite of some inherent issues, it is getting adapted in all areas and businesses both nationally and globally. There is growing awareness on open source. Having said this, we also need to understand that only since 1999 open source was looking up. Hence, there is lack of trained manpower that can develop software programs based on Linux or open source products. That has been the key inhibitor in its adoption.”

"Linux gets used for infrastructure applications like mail servers" - A Rajendran Director, Information Services Team Computers

A Rajendran, Director, Information Services, Team Computers says, “Linux gets used primarily for infrastructure applications like mail servers, proxy servers, firewalls and IDS servers. But there is stiff competition with regard to priced-products mail servers (MS Exchange) from Microsoft, proxy servers from Microsoft, WinProxy, Firewalls, and IDS from Checkpoint. Linux-based solutions offer
most of the benefits and they come cheap with vendors generally charging for the implementation.”

"We have started penetrating B and C class cities in India. We are studying the local market and offering customers a localised product" - Sachin Dabir Head, Enterprise Sales Red Hat India

Ambastha of Oracle explains Linux’s popularity in the segment, “Linux awareness is growing by the day and we see larger adoption. We see adoption of Linux by both large and small companies across various industry segments thus saving enormous amount of investment in OS and its support without compromising on features and power. Open source like Linux has attained a certain maturity to take up the challenges in the SB segment. Oracle is a popular database on all flavours of Linux.”

Explains Rahul Sharma Head, IT, Triune Projects, “We have a combination of Windows and Linux, based on application support. The reason for this implementation is the availability of the platform and the cost-effectiveness of the application which can support multiple platforms.”

Sachin Dabir, Head, Enterprise Sales, Red Hat India says, “This segment is a big and important market for Red Hat. We have worked actively with many SMBs in India during the past few years.”

Challenges for Linux among SBs

In the survey, it appears that there are some road blocks for Linux to expand its reach among SBs. The survey says that the two big challenges for Linux are preference for Windows—75 percent and lack of skilled manpower for Linux—23 percent.

Dabir comments on Linux’s marketshare, “The biggest challenge in this market pertains to reach. It’s a huge market collectively but when it comes to reach it looks scattered.”

However, Red Hat is making efforts in reaching out to every corner of the Indian market. “As part of our initiatives, we have started penetrating B and C class cities in India. We are studying the local market and offering customers a localised product. From the implementation aspect we have enhanced our presence all across by acquiring partners who are leading service providers.”

The Windows affair

Windows continues to have a stronghold over the market. Linux has a long way to go among SBs for the simple reason that 75 percent of them still prefer Windows for their IT applications. Windows is the preferred choice because of the ease-of-use factor.

Rajendran of Team Computers says, “The ease-of-use factor is maintaining Windows’ position. Apart from this, factors like availability of skills and support are among the drivers for Windows.”

Elaborating on the type of usage for Windows, Rajendran says, “Generally Windows platforms run various SB applications like ERP and accounting and home-grown applications like financial accounting, inventory and HR.”

Sharma of Triune says, “I believe that acceptability of Windows as the primary platform for operation of various softwares worldwide is the key factor in its favour. Besides, user-friendliness is helping Windows maintain its position in the market.”

Mittal of Microsoft stresses on the importance of SBs, “This is one segment which is fuelling the growth for us. By numbers itself, it seems a great market for us.”

Messaging software

The survey found that Microsoft’s Exchange leads with 50 percent of SBs preferring it.

Rajendran says, “Exchange has Windows’ ease-of-use. Outlook integrates well into Office and provides an integrated mail/collaboration tool through Exchange. Exchange provides integrated security in the Active Directory Services environment which has become popular.”

Dabir of Red Hat comments, “Linux is getting good response as a messaging software application among all industry verticals including SBs. As far as the SB market is concerned, affordability is a major issue. As for our competitors, majority of the mid-level companies cannot afford to deploy their products because of higher TCO.”

Mittal of Microsoft differs, “MS Exchange is accepted and appreciated because of many reasons including affordability. Above all, it gives value for money.”

Linux-based mail server solutions are increasingly accepted. Novell’s Open Exchange is picking up.

Databases for SBs

In respect of database solutions, Oracle and IBM are market leaders. Ambastha says, “Oracle offers a range of products to SBs at various price points that deliver rich functionality and power at competitive and economically viable options. Oracle Database for these companies is not only available on Windows and Linux but on all platforms. Oracle India launched the Oracle Database 10g Express Edition (Oracle Database XE) as a free starter edition. The beta version is now available for companies in India. This new edition of Oracle Database 10g offers application developers, database administrators (DBAs) and students a free starter database to develop and deploy their applications. It is freely available for ISVs and hardware vendors to distribute or embed with their applications and products.” 

Dhamodaran says, “DB2 has been doing well in this segment, primarily with regard to partner solutions. IBM’s flagship product for the mid-market segment is DB2 Express. The database management market is progressing based on key solution requirements that customers have. IBM has comprehensive offerings for each of the requirements. The key to providing solutions to customers is having business partners who are skilled in the particular categories. We took up an enablement programme for partners beginning last year and today we have a good pool of enabled business partners for the required solution areas.”

Ambastha says, “With the introduction of Oracle Database XE, the company effectively expands its database portfolio to six database editions: Enterprise Edition, Standard Edition, Standard Edition One, Personal Edition, Database Lite, and now Database XE. These offer different levels of advance database features to best suit customers’ business and budget needs.” 

She adds, “Oracle now has a database menu for organisations and developers of all sizes and budgets, this menu includes databases that can process terabytes of data alongside advanced data management capabilities to a free starter edition like Oracle Database XE, which allows SBs, ISVs and developers to adopt and experiment.” 

Attracting CIOs or CEOs

In SBs or in smaller size SBs the position of CIO is usually taken care of by the CEO or the head of the company. Mittal says, “We segmented the market—one category is mid-market and another is the SB segment. In the second category, we usually have to convince the CEO or the top boss of the company. The top boss has relatively lesser awareness on IT implementation hence it gets difficult to convince him. Moreover, he looks for saving money and seeks quick ROI, hence we need to deal carefully with him. However, when we talk to a CIO he understands the technology and the various issues associated with it.”

Dhamodaran of IBM believes, “It is critical to have a solutions-based approach outlined for this segment. It is essential to have the requisite skills available for different middleware-based solutions. In addition, the accent is on platform independence of middleware products and strong local support for conducting Proof of Concept. Also, pilots are important for these companies.”